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India sets out to sell more wheat but keeps price high

India started another round of tenders to sell wheat on Thursday after a gap of three months as it tries to sell 2 million tonnes to cut bulging stocks.

But its stubborn refusal to move from a minimum price of $300 per tonne set for earlier exports which failed to reach their target of 4.5 million tonnes is likely to keep interest subdued.

India, keen to boost any exports in order to reduce a gaping current account deficit and support the rupee, which has lost 16 percent in value between from June to September, is reluctant to sell its wheat abroad below the level set for domestic buyers.

It said on Wednesday it had set a target of earning $600 million from the extra quantity allowed to be shipped out by the end of the current fiscal on March 31.

On Thursday, the three state trading companies - State State Trading Corp., MMTC and PEC - issued tenders for wheat exports totalling 160,000 tonnes, the first such offers since June.

"It appears the government wants to test the market with the high floor export price of $300 per tonne against the backdrop of the weak value of the Indian rupee," said Tejinder Narang, a New Delhi based commodity analyst.

Narang said the floor export price is about $60 per tonne higher than supplies from Black Sea origins, making the Indian supplies unattractive to prospective global buyers.

India last year had allowed 4.5 million tonnes of wheat for exports to be sold by the three state run companies until June, 2013. Out of that, 4.2 million tonnes was sold, earning $1.4 billion for the government.

India's wheat production is about 93 million tonnes in 2013 and demand is about 76 million tonnes. The government uses stocks to supply subsidised grains to the poor and for a buffer against years of drought and poor harvests.